Behind Market Turmoil, Potentially Good News

Nonetheless, there are many ways things may not go according to plan: Growth may abruptly downshift as a tax-cut fueled “sugar high” recedes; tight labor markets and tariffs could push up inflation; or emerging market turmoil could spread.

In its semiannual outlook released this week, the International Monetary Fund said the U.S. economy is already operating above its normal capacity, and the fiscal boost coming from lower taxes and increased spending “could lead to an inflation surprise,” triggering rapid rate increases, global financial turmoil, and a stronger dollar, all bad for global growth.